Universal Registration Document 2021

The business development of Publicis Groupe notably involves external growth transactions. These acquisitions have resulted in the recording of significant goodwill and intangible assets in the consolidated balance sheet.

As of December 31, 2021, net goodwill amounts to euro 11,760 million in the consolidated balance sheet.

Publicis Groupe performs impairment tests at least once a year. An impairment loss is recognized whenever the recoverable amount is below the carrying amount, the recoverable amount being the higher of value in use and fair value less transaction costs.

The valuation of the recoverable amount of these assets involves the use of numerous estimates and judgments from the management, in particular the assessment of the competitive, economic and financial environment in the countries where the Group operates, the effects of Covid-19 economic crisis, the Group’s ability to generate operating cash flow as a result of strategic plans, in particular the levels of revenue and operating margin, and the determination of discount and growth rates.

The impairment tests on goodwill did not resulted in Publicis Groupe recognizing of any losses of in 2021.

As of December 31, 2021, net intangible assets amount to euro 1,379 million in the consolidated balance sheet.

We consider that the valuation of goodwill and intangible assets constitutes a key audit matter, given the sensitivity of these items to the assumptions used by the management and the materiality of the amount of these in the consolidated financial statements.

• We obtained an understanding of the procedure and key controls set up by the management to perform the impairment tests and notably for the determination of the cash flows used to calculate the recoverable amount.
• In order to assess the reliability of the business plans data used to calculate the recoverable amount:

• we compared the 2022 financial projections with the previous financial projections and with the actual results for the fiscal years concerned;
• we conducted interviews with the independent expert engaged by Publicis Groupe for impairment tests’ purposes and with the financial and operational managers of Publicis Groupe to evaluate the main assumptions used in the 5 years business plans and compare these with the explanations obtained;
• we compared the main assumptions used by the management of Publicis Groupe concerning revenue, operating margin and investments with external data when available, such as market studies or analysts’ reports;
• we evaluated the sensitivity analyses performed by the independent expert and carried out our own sensitivity analyses on the key assumptions in order to assess the potential impacts of these assumptions on the conclusions of the impairment tests.

• Concerning the models used to determine the recoverable amounts, we involved our valuation experts in order to:

• test the mathematical reliability of the models and re-calculate the significant amounts;
• evaluate the methods used to determine the discount and infinite growth rates, compare these rates with market data or external sources and re-compute these rates using our own data sources.

• We also assessed the appropriateness of the information set out in note 6 to the consolidated financial statements, which discloses the main assumptions used to determine the recoverable amounts.